Ford Motor May Build Electric Cars in China With Partner, CEO Mulally Says

Ford Motor Co. (F) may make electric cars with its partner in China as the auto industry moves toward producing more fuel-efficient vehicles, Chief Executive Officer Alan Mulally said.

“As we move to more electrification, you’re going to see more hybrids, plug-in hybrids and all-electric” cars, Mulally, 66, said in a Bloomberg Television interview on Sept. 24 in Chongqing, China.

Mulally, in China for the groundbreaking of an engine transmission plant at Ford’s venture with Changan Automobile Group, didn’t say when the Dearborn, Michigan-based company may start making the electric cars. Rivals Daimler AG (DAI) and General Motors Co. (GM) have announced plans to add such vehicles in China as the country, the world’s largest polluter, seeks to reduce emissions.

The government aims to have 1 million electric-powered vehicles on the road by 2015, according to the Ministry of Science. A rollout of electric vehicles depends largely on infrastructure and advances in battery technology, Mulally said.

Additional Models

Ford will also consider introducing its Lincoln luxury brand in China to tap the growing high-end sedan market, Mulally said. The carmaker now sells models including its Mondeo sedan and Focus small car in the country.

“We have a great luxury brand in Lincoln, which we have recommitted ourselves to,” Mulally said. “There’s going to be tremendous pull from China to have access to these great vehicles.”

Ford is spending $1.6 billion to build four factories in China, where it plans to triple its lineup by offering 15 models by mid-decade. The carmaker, dependent on the U.S. and Europe for most sales and profits, had 2.7 percent of the passenger- vehicle market in China through June, according to J.D. Power & Associates, while GM controlled 10 percent.

China’s demand for luxury cars will grow about 35 percent this year, analysts at J.D. Power forecast. This compares with a 5 percent increase for overall auto sales as predicted by the China Association of Automobile Manufacturers. Ford also expects the market to grow at about 5 percent, near the low end of its 5 to 10 percent forecast, Joe Hinrichs, group vice president and Asia chief, told reporters in Beijing today.

Delivery Slowdown

Expansion in Asia is part of Mulally’s wider plan to boost annual global sales by 50 percent to 8 million vehicles by 2015. Ford’s China sales have risen 11 percent this year to 341,746, the company said on Sept. 6.

Overall vehicle sales in China reached 18.06 million last year, boosted by government tax breaks and rural subsidies.

Ford is encountering pricing pressure in China as the auto market there slows, Hinrichs said on Aug. 10. Overall deliveries in China are forecast to slow this year from the 32 percent gain in 2010, after the government removed sales-tax breaks in January and the central bank raised interest rates five times since October.

Globally, the automaker is adjusting capacity to reflect demand as economies slow, Mulally said in Beijing today, declining to give specifics. Overall U.S. auto sales in 2011, including medium- and heavy-duty trucks, are likely to fall slightly below Ford’s forecast of 13 million to 13.5 million vehicles, and Europe’s industry deliveries will reach about 15.2 million, he said today.

“In the last five years, we would never chase incremental sales when the demand wasn’t there,” Mulally said today. “That’s why we sometimes take a hit on market share. The most important to do in business is to match production to the real demand and operate profitably.”

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

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